Adolf Windaus and Walter Schöller of Schering gave him the advice to work on hormones extracted from ovaries. This research lead to the discovery of estrone and other primary female sex hormones, which were extracted from several thousand liters of urine.[5][6] For this research he won the Nobel Prize for Chemistry in 1939 together with Leopold Ružička who was involved in the synthesis of several newly discovered steroids.

Butenandt joined the Nazi Party on 1 May 1936 (party member No. 3716562). As the head of a leading institute, he applied for government funding on concentrated research labeled kriegswichtig (important for the war), some of which focused on military projects like the improvement of oxygen uptake for high-altitude bomber pilots. His involvement with the Nazi regime and various themes of research led to criticism after the war and even after his death, the exact nature of his political orientation during the Nazi era has never been fully resolved.[9] When the institute moved to Tübingen in 1945 he became a professor at the University of Tübingen. In 1956, when the institute relocated to Martinsried, a suburb of Munich, Butenandt became a professor at the University of Munich. He also served as president of the Max Planck Society for the Advancement of Science following Otto Hahn from 1960 to 1972.